Transport Committee

Oral evidence: Work of the Operator of Last Resort, HC 1708

Wednesday 6 September 2023

Ordered by the House of Commons to be published on 6 September 2023.

Watch the meeting

Members present: Iain Stewart (Chair); Mike Amesbury; Jack Brereton; Sara Britcliffe; Ruth Cadbury; Paul Howell; Gavin Newlands; Greg Smith.

Questions 1–99

Witnesses

I: Richard George, Chair, DfT OLR Holdings; Robin Gisby, Chief Executive Officer, DfT OLR Holdings; Chris Jackson, Interim Managing Director, TransPennine Express; and Huw Merriman MP, Minister for Rail, Department for Transport.

Examination of witnesses

Witnesses: Richard George, Robin Gisby, Chris Jackson and Huw Merriman MP.

Q1                Chair: Welcome to today’s session of the Transport Select Committee. For the purposes of our records, could I please ask you all to state your name and organisation?

Robin Gisby: I am Robin Gisby. I am the chief executive of the holding group, DOHL, and in that role I also chair the four TOC boards of the four train operating companies within the group.

Richard George: Good morning. I am Richard George, the non-executive chair of DOHL.

Chris Jackson: Good morning. I am Chris Jackson, interim managing director at TransPennine trains.

Huw Merriman: Good morning, Chair. I am Huw Merriman. I am the Rail and HS2 Minister.

Q2                Chair: Thank you, and welcome to today’s session. We are grateful for your time. Before we dive into some of the specific issues with TransPennine, it would initially be helpful just to get an understanding of how DOHL operates on a day-to-day basis and how you are looking at managing TransPennine in your broader portfolio, Mr Gisby.

Robin Gisby: We exist under the Railways Act of many years ago in case something happens to a train operator and the Secretary of State asks us to get involved. We were on standby when that first happened with LNER five years ago, and progressively, for different reasons in each case, other train operators have come across to us. We are prepared in case something like that happens. We monitor the situation, in conjunction with the Department, so we are ready in case another one happens.

We run it pretty lean and pretty tight. We run each train operator independently because, at some point they will go back to where they came from. It has not happened yet, but we are always planning and ready for that. What we are trying to do is just be good operators. We want to run these businesses well. We want to improve performance. We want to improve safety. We want to improve customer service and relations with stakeholders. Each one, as they have come across, has been in a slightly different place against those four or five characteristics.

It is quite a devolved structure. We do not have many people sitting in the group. There are only eight or nine of us. We are based at Waterloo, alongside Andrew Haines and NR, in anticipation of GBR, but we run it as a pretty lean structure. We appoint good management to go out and run the TOCs. We give them advice, guidance and support when they need it, and a bit of air cover to get on and do a good job. That seems generally to have worked pretty well over the last two or three years. On the measures that as good operators we look for, I think we have made some reasonable progress. That is the way we run it.

Q3                Chair: You say you are ready to step in should a situation arise. What is the balance of time you spend being match ready, if I can put it that way, and actually running the ones that you have?

Robin Gisby: With LNER, from the previous bid, you could look at the size of the performance bond it had. You could look at the cash outflow each month. You could divide one by the other and predict when it would happen. We had a couple of months to get ready for that.

Similarly with Northern, we had a reasonable period to get ready. With some of the others it happened a bit more quickly. Southeastern was really quite quick. I think it was 14 days or something like that. The decision with TransPennine was relatively quick. At any time you are looking out there at when an existing contract might come to an end, and you are getting ready and working closely with the teams in the Department in case it should happen. You then get a reasonable amount of warning to move in as and when it happens.

So far, that process has worked pretty well. It would be tough to do it overnight, but for the last two that we have done—Southeastern and TransPennine—with a lot of support from the Department, some good advice and a support team and, I have to say, co-operation by the other owning group, it has worked reasonably well.

Q4                Chair: Given that you have some operations that, conceivably, could be in competition with each other, if you look at some possible journeys you could do by TransPennine, LNER or Northern, how do you avoid or manage potential conflicts?

Robin Gisby: It is a good question. We haven’t had to worry about that yet. Northern is quite a different business from LNER. There are some issues, for example, on the east coast where there are three or four operators and there has been a capacity constraint. The investment that Network Rail has put in is now easing that.

It may become a problem, if we look at the pattern of service of, say, TransPennine against LNER, but at the moment we are running those quite independently. There are all sorts of processes and rules in the industry about capacity allocation and bidding. So far it has not been a problem. It might be over the next couple of years in areas where there are several operators and a couple of them are under our ownership at the moment. We will work through that with the Department, based on their policy and guidance on what they would like to see happen, and based on the rules around bidding and capacity allocation and the role of the Office of Rail and Road regulation in that.

Q5                Chair: Compared to a traditional franchise operator, what direction do you receive from the Department?

Robin Gisby: We get a letter from the Secretary of State, because we are publicly owned, which sets out what he would expect us to do. That would be a perfectly normal thing for a public body like us to get. There is also a market team within the Department that looks over the performance of our train operators, alongside anything they would do for equivalent ones that are owned by private sector owning groups.

That TOC management has to work in that way. We are very keen that we are not treated separately or independently compared with any other train owning group. We want to be treated the same in the way that the Department looks at us.

Richard George: Can I add something?

Chair: Please do.

Richard George: Each of the TOCs has a contract with the Department in exactly the same way as the private sector TOCs do. It mirrors the same structure. In how we deal with competition, it is the same contractual relationship that each individual TOC has with the Department as if we were in the private sector. The contracts are slightly different because the financial arrangements are slightly different, but other than that, in terms of specification and what they are required to do, it is exactly the same.

Robin Gisby: I would expect David Horne, running LNER, or Nick Donovan, running Northern, to be treated in the same way by the market teams in the Department as the private sector TOCs they run alongside. The funding arrangements are different. The dividend and all that kind of stuff is different because we are publicly owned.

Q6                Chair: I have one last question before I hand over to colleagues. Minister, from the Department’s perspective how do you evaluate whether DOHL has the capacity to take it on, should there be another issue and another operator they need to take over? How do you evaluate that they have the capacity to carry out the responsibilities?

Huw Merriman: Thanks, Chair. As Richard and Robin said, they are lean at the holding part, with just 12 employees there. Each train operator is led and managed by the leadership, and then the staff is in there.

Robin touched on the letter that gets sent every year on setting objectives. Certainly, the next one is imminent and will set out that we want to ensure that, while they continue to remain lean and operate in that particular manner, they have all the resources they need to be able to deliver the TransPennine Express change and then be ready and able in the event that they have to take on any more. We evaluate it, but we appreciate the model. We believe it makes sense to have a very nimble and lean holding operation, and then to see all of the train operators with the staff and the ability to run themselves on a day-to-day basis.

Q7                Chair: I am not suggesting there is a likelihood of another operator being required to be taken over, but if there was one next month, say, are you confident that DOHL would have the capacity now to manage it?

Huw Merriman: First, I can confirm that there is nothing in place right now. That was a conversation that was only some months back, when TransPennine Express moved over to the operator of last resort. I think that they have certainly demonstrated their ability to take that on. You will hear more from Chris about his vision. It is something that we ask them to keep on a regular watch basis.

By its very nature, because they have already been relatively lean—I talked about 12 employees—their structure allows them to be able to build up. It is something that we keep a watch on, and we will always want to make sure that Richard and Robin are supported so that they have everything they need to ensure that their stable of operators delivers, which is 20% of train services in the stable.

Q8                Paul Howell: I have a quick supplementary. I want to confirm what you do. You are obviously looking after Northern and TPE. Do you ever take a step back and say, “Actually, TPE should be a bit smaller and Northern should be a bit bigger,” or that there should be some changes between the different ones that you do, or do you just treat them as a number of separate ones?

Robin Gisby: That’s the underlying question for me as well. It is a very good one. We want to keep them separate because, at some point, they will go back. What you find at times within an owning group is that one train operator relies on the owning group for various back-office functions. Somebody is running the payroll, somebody else is looking at engineering and so on. When you step in, you have to untie all of that and bring it back across. We do not want to have big group functions because otherwise we could not hand them back whenever we were asked to do that. What we have not yet looked at—going back to the Chair’s question earlier—are the geographic footprints being relatively distinct, which is the point you make. Around the edges, maybe, over the next couple of years.

Chris is on it. Today is actually the 100th day of our ownership of TransPennine. We wanted to get a lot of things done in that first 100 days. Stabilising it is, first and foremost, running the trains on time and reliably, which is what we are doing. There are some things that you might do over the next couple of years. There are one or two services it runs that might sit better in Northern. There are one or two things that I would like to see it do to get to be where LNER has got to over the last couple of years. LNER is outperforming the market. It has volume revenue ahead of pre-covid levels. Our ambition for TransPennine is to make it look like LNER and push it forward and develop it in that way. Over the next couple of years that might mean that one or two things get moved around, but I think it would be pretty much at the margins.

Richard George: At the end of the day, the specification as to what they want us to operate comes from the Department. We operate to a specification. We can advise back, “Maybe we could do this, maybe we could do that,” but in the end we are obliged to run that specification, and that is what we run. We can look at these things, and look at economies of scale between them. As Robin says, we could maybe switch train services from one to another. We can look at that, but in the end it is the specification from the Department.

Q9                Paul Howell: I was curious as to whether you even bothered to look at it.

Robin Gisby: On the side of the train it says, “Get across the Pennines quickly,” and, first and foremost, that is what we want to do.

Q10            Sara Britcliffe: Richard, there will be a difference in contracts, but, overall, as a managing approach to train operating companies, how do you differ from the private sector?

Richard George: In many ways, we don’t differ. We all operate to the same contractual relationships. We have a very small holding group at the centre, but actually I think you will find that most of the owning groups have small groups in the centre. They expand when they are bidding, but when running the railway, they are small groups.

We are similar in many ways. We have some differences in so far as we do not have the shortened timeframe that a franchise has. We can sometimes take longer-term decisions because any decisions we take are built into the structure of the company going forward. We do not have to try to make a rate of return on investment in the life of a franchise. That can be slightly different, but, generally speaking, our objectives are the same as the private sector companies—to run a good railway.

Robin Gisby: There are similar targets. Everybody wants trains to run on time. They want them to be safe, they want them to be clean and they want good customer service. We think we are good operators, and that is what we try to do.

We have a bit of a phrase, “Turning back and doing the right thing.” If you have been in a franchise for the last three or four years you might not be sure if it will be extended or not; Southeastern was a very good example. You think, “I’ve spent six or seven years. Have I got another year or another two years?” The management are quite distracted by that. They are spending quite a lot of time talking to their head office and discussing it with the Department. What we have always said to our train operators is, “Do the right thing for the long term. Take an investment decision that is the right thing.” Railways are long-run investment cycles. When we stepped in at LNER, it had some franchise commitments from the previous arrangements. It wanted to do a few things, but it could not see a return within a couple of years. A new revenue management system was put in there.

We are doing some things now with Northern and Southeastern on rolling stock. What we try to say is, “Do the right long-term thing. At some point the ownership will change and you will move from us back to wherever you go.” It is that long-term perspective that we try to emphasise in everything that we see: be bold, be brave, get on and do stuff.

Q11            Sara Britcliffe: You have touched on my next question. You talked about the direction that you are giving to train operators. What level of direction do you give? Is that orders or suggestions?

Robin Gisby: They have an annual business planning cycle. They have an annual relationship with the Department through the market teams. We had two board meetings yesterday. What I tend to do is to make them think and look long term. What is the right thing to do for passengers, for communities and for stakeholders? We are railway managers and operators. We run these railways on behalf of the passengers and the communities they serve. That is what we do. When we stepped into LNER we changed it around. We rebranded it as LNER and put some nice warm sunset pictures of important things up and down the line, and said that all the food comes locally. What we are trying to do is emphasise to the staff that we run these railways on behalf of those passengers and those communities, and do the right thing in the long term for them.

You are also stepping into some operators’ staff who are pretty battered and bruised. If you had been on the frontline of Northern two or three years ago, it was not a pleasant place to be. Working with the staff and saying, “We’re here for you, we’re supporting you, we will invest in you, and we will develop you,” is important. Most people’s interaction with the railway is a very local and intimate thing. If the staff are not thinking, supporting and going about it the right way, this ain’t going to change.

Richard George: The way in which we affect it is that Robin chairs the board of each of those TOCs. Robin chairs them. He does not direct them. He does not instruct them. He does not tell them what to do. He just makes sure that they have some really good ideas for the long term. They are ideas. That is the role of the chairman. It is to make sure that people are thinking about the right things and moving in the right direction. That is what we do at the DOHL board. That is what Robin does at their board. It is to make sure that they are heading in the right direction. How do we know what the right direction is? From many years of experience.

Q12            Sara Britcliffe: Could you give an example with Northern of one of the interventions that you have made there, or a suggestion that you have made that they have then gone on to do?

Robin Gisby: We are pushing hard on different forms of train. We are going to open the Northumberland line. I do not want to put tired old diesels on the Northumberland line forever. I want it to look smart and new. I want to have digital ticketing. I want to have first-class accessibility. I want that to help rebuild the community up and down the line.

I saw that years ago with a line that we developed from Cardiff up into the Welsh Valleys, where you were going into third generation unemployment. It was heavily subsidised, and it always will be heavily subsidised, but the railway was doing other things. It was bringing unemployed people down into Cardiff and it was for the people in Cardiff who could not afford a house but could move up there, and so on. We want to do that in places like the Northumberland line.

We are taking a long-term view up there, for example, about traction path. I don’t know if it is going to be battery. I don’t know if it is going to be hydrogen. We have challenged the management: “You won’t order another diesel train.” Siemens do not make a diesel train any more. They have not for a couple of years. They have a loco factory in Sacramento for the American freight market.

You need to come at this with a long-term view. You need to say some slightly unreasonable things to get people to think differently. The thing you absolutely have to do is inject pace. This industry has gone to sleep in the last two or three years. It has lost its place in the sun. You need to push them to think differently and do different things. There is a restless energy about that. If you get the pace right and you get them thinking differently, generally the numbers come right. You can see that with LNER.

Something we are looking very hard at—Chris will talk about it in a bit because I am pressing him hard on it—is TransPennine. We have very shiny, smart new trains from Hitachi. They have a catering galley in them. It is not used. There is a lot of debate about first class, trains and food, and does it pay its way and is it expensive and all the rest of it. To send people from Manchester to Scotland and not feed them or give them a hot drink does not feel right. Either we are going to do that, or we are going to take the kitchens out and put more seats in if we get overcrowding. When TransPennine comes right quite soon, it will come right quite quickly.

It is pushing them hard to think of the right thing to do in the longer term. They cheer up. They think differently, and you can see it. It takes time. LNER is performing really well now. I think they should be very proud of what they are doing. It took a year to get them to think differently, to think long term and to get on with stuff. It is flying now.

Richard George: Doing the right thing for the long term is not always popular. Some of the rationalisation of services through Manchester that we did, in conjunction with the other operators at Manchester, involved reducing trains on the Castlefield corridor. That was not popular, but it was the right thing to do for the long term, to stabilise things. Doing the right thing is a nice buzzword, but actually it is not always possible, but doing the right thing for the long term is the right thing to do.

Robin Gisby: We might as well confront it now. We are going to do that in December with TransPennine. We are going to cut the service back a little bit—16 trains out of 300 plus; I am sure Chris will give you a bit more detail. I would rather run 100 trains reliably in December than promise to run 120 and end up running 90. That is what we are going to do. With a low-interval service, cancellations are the most dreadful thing you can do to people.

Q13            Sara Britcliffe: Chris, how does being managed by DOHL differ from being managed in the private sector?

Chris Jackson: I have had experience of operations with Arriva Group when, of course, Northern used to be operated by Arriva. I am interim here. My substantive post is with Northern. As an interim managing director at TransPennine, I feel as though I have the freedom to do exactly the right sort of things to make things better for our customers.

Robin referenced pace earlier. I have a great team at TransPennine. All the way from the frontline to the leadership team, they want to do the right thing. They want to turn the business around and get it back to the star performer it once was. We feel as though we have the freedom, and we have the pace and support to make those changes.

Q14            Sara Britcliffe: Are there any disadvantages? You talk about the advantages there, but are there any disadvantages?

Richard George: He said in front of his boss.

Chris Jackson: Bear in mind I am interim; and I am looking to maybe get the job permanently. I have to be a bit careful with what I say. I do not see any disadvantages, to be honest. Inevitably, when there is a change of ownership there is a little bit of turbulence that comes with it. That takes a few months to settle down. It has taken a bit of time to settle the team down, but at this moment in time I think we have a plan. We have got across the issues that are facing the business, and, more importantly, we know what we need to do to fix it. That is a really good place to be. I like to think that if you speak to some of the frontline colleagues at TransPennine Express, they will recognise what we are trying to do to fix things and they appreciate that.

Q15            Sara Britcliffe: Finally, Minister, what can DOHL not do that a private operator can?

Huw Merriman: One of the ways I was going to reflect on this, just to back up what everyone has said so far, is the way in which I interact. I do not see any difference between an MD like Chris and an MD from one of the TOCs on the private sector side. When I have meetings, every single MD is there. I ask the same questions as we go round the room.

I think the reason why the differences have become less over the years is that, whereas previously the private train operators were buying a franchise, they paid their money and it was down to them to actually grow their numbers, now they are collecting the revenues and passing them through. The taxpayer is ultimately taking the risk and reward. In that sense they have become a lot more similar, so it makes it a lot easier from my perspective to interact because the model is not that different. The only real difference that I see, if you look at it crudely, is that there is not an actual fee being paid through. We are just paying for the operations of all the staff in that particular regard.

In some of the things, as we look to the future, where again we are going to have to work with the team there, we are looking to incentivise for the private train operators and for them to take more risk and then gain more reward. Effectively, they can use their own balance sheet to take risk, and then they share the proceeds. That is something that we can actually do to the private sector, but, of course, it is a different matter, and therefore we have to come up with a different incentivisation model, when effectively it is the taxpayer taking all the risk. It is effectively the changes we are about to put back in to bring more private enterprise into the train services. That is where you start to see it differ between the two models.

Q16            Ruth Cadbury: I am trying to get an understanding of what your priority objectives are. I heard Robin and Richard say a combination of things. Is it increasing your operators’ revenue? Is it to cut their costs, or is it to improve services for passengers?

Robin Gisby: It is all three of those and a bit more. First and foremost, it is to run it safely. We focus on subsidy now. There are cost targets. Our combined operations are getting a subsidy every four weeks of about £100 million. That is a lot of money to be accountable for, but, first and foremost in that, the best thing to look at now is subsidy. We have not done it with TransPennine yet, but with the other three we have a pretty clear idea of when their finances should get back to a pre-covid level. The year before covid LNER paid a dividend to Government of £50-odd million—we can give you the exact number in a follow-up—because it is a big profitable railway. Northern is a huge cost base. The average ticket price on Northern is about £3.50. The average subsidy for tickets is about £5. It is a cost of £8 or £9 for a £3.50 ticket. LNER generates £30 (or so) yield per journey and we want to grow revenue just as much as we want to reduce costs.

We have now got to pretty much a fixed cost system. There are some things we would like to do around productivity. We will probably have a conversation in a minute about workforce reform, industrial relations and all the rest of it. As much as we want to grow revenue, we also want to control our costs. It is balancing both ways. Getting customer service right is absolutely key to that because that is what passengers want and they will come back. A lot of people see growth in the leisure market. Our trains are quite full at the weekends. We are not great at the London commuter market yet, but it is getting better. As we have improved performance with Southeastern, people are coming back. London is busy, which is a good thing. I wouldn’t think we are ever going to get back to pre-covid levels, but if we can get the leisure market back, that is a pretty good thing. It is a mix of all of those things.

Richard George: Can I add something to that?

Ruth Cadbury: Of course.

Richard George:  I have never worked in a train company where the three things you mentioned do not operate in a virtuous circle. If you get customer service and the performance right, the revenue sorts itself out and the costs are easier to manage. If you get it wrong, it all spirals the other way. Getting the virtuous circle going up is critical in any train operating company, which is why we spend so much time talking about train performance. Actually, if you get that right everything becomes much easier to manage.

Q17            Ruth Cadbury: Is there a conflict between preparing the operators to hand back to the private sector and providing the best possible service to passengers?

Richard George: No.

Robin Gisby: We have not come across that yet because we have not done it.

Q18            Ruth Cadbury: You mentioned that you are not affected by the issues that a lot of people are concerned about, which is that the problem with the franchise system is that it is too short-termist. You are not beholden to that in the same way, I think you said.

Richard George: Not in quite the same way, but we still deliberately maintain all the train operating companies separately in order to be able to pass them back. Potentially, we might save some cost if we had, for example, one payroll that went across everybody, but we keep them all separate in order to send them back. I think that becomes a virtue in itself. From 25 years of working for British Rail before we went into the private company model, I know if you try to do everything centrally controlled you get into a big tangle. Keeping them separate is easier.

Q19            Ruth Cadbury: Isn’t there a revenue cost to that, which therefore possibly has a knock-on effect on passenger experience?

Robin Gisby: I think a devolved model of local management taking decisions is working very well for us. The other thing we want to do whenever these are handed back is to give them back with long-term development. They came to us in this state for various reasons, and they are all slightly different. We have done these things with them for the journey that we have had them. The right measures are moving them in the right direction. We are giving something back that is better than when we got it. We are also giving something back to whoever gets it that already has a long-term future. We are not handing it back and saying, “Well, here  it is, those trains will fall to bits next week,” or “That revenue system will fall over the week after next,” or, “All the staff are not qualified.” We are giving something back with a long-term perspective for whatever the policy is at that time and what happens to it.

Q20            Ruth Cadbury: Do you want to add anything, Minister, on the competing challenges and the long and the short term?

Huw Merriman: No, because I think it has been answered well. I am very conscious that I am here as a sort of wingman to the main event.

Q21            Ruth Cadbury: Mr Gisby, you just referred to the changes in patronage with increased leisure journeys, particularly at weekends. How are you responding to the changes in patronage?

Robin Gisby: We are trying to run as many services as we can at the weekend. Chris has sorted some things out with TransPennine on Sunday services, for example, as part of a wider reset that he has had with industrial relations and unions. We are responding to that. We are full and happy at weekends. We have as many services as we can.

There has been some early work with Network Rail to move some of their engineering work to midweek. Is it better to dig up a bit of a main line on a Wednesday compared with a Sunday? With events at weekends and all the rest of it, you can see—

Q22            Ruth Cadbury: Maybe Fridays or Mondays. Most people who work in the office part-time do that midweek.

Robin Gisby: Yes. If you could do it on a Monday and a Friday, that would be quite good. It would leave a little bit of the week and the weekend. We are responding to all of that, and that is going pretty well. Where we were before, if you had a poor weekday performance for commuters and on Friday night you said, “Let’s all go on the train at the weekend?”, there was a kind of, “No, it’s been bad enough during the week, we don’t want to do that.” What we are finding now is that the weekday service is good. The off-peak service is quite busy. People are maybe staying at home for an hour or two doing some work and then coming into town and going back again. The weekends are busy, and that is a nice place to be.

Richard George: But we have some legacy issues to deal with as well. On the west side of the Pennines in Northern, Sundays are difficult. Sunday is not in the working week of many of the staff on Northern, which makes running services on a Sunday a bit hit and miss. It is a volunteer railway. That is a legacy issue that we need to deal with, but it makes reliability difficult on a Sunday on the west side of the Pennines.

Q23            Jack Brereton: I want to ask Robin a bit more about LNER’s performance. You have obviously illustrated the return of passengers to pre-pandemic levels. Could you please clarify whether that has also resulted in a return of revenues to pre-pandemic levels?

Robin Gisby: Yes, pretty much so. There is a yield issue. The front of the train is less busy because the business first-class market is not quite there. If you look at who was on the 7 o’clock Leeds into King’s Cross three or four years ago compared with who is there now, that yield has gone down a bit. Overall, the yield is £37 or £38, so it is creeping back up again.

In the swing from business to leisure, peak to off-peak and weekday to weekend, it is quite a complicated mix. That is why one of the great investments we did there was to understand that better with some of the systems that we have. We are seeing revenue come back as well. We have periods when we are ahead and we do not need a subsidy, but you still have seasonality with Christmas time and engineering work. We have a date in mind, in months not years, when that railway will get back to where it was before covid. One of the few redeeming features of covid is that it happened at the year end, so you can look at the year to March in 2019-20 and compare it.

LNER had a £50 million dividend, ish—I will give you the exact number—the year before covid. When it gets out of subsidy and back to premium, some time next year, it will have consumed £1 billion of subsidy from covid. That is a railway that is a premium paying railway and will be better for the investment that Network Rail put in, but it has gone from a £50 million dividend to £1 billion of subsidy. It will take 20 years to recover that amount. That is the cost pressure the industry is under. It is big numbers.

Q24            Jack Brereton: Richard touched on some of the differences in how you and private operators function financially. Obviously, there are different cost pressures. Isn’t it easier to recover passengers when you are not faced with the level of cost pressures that some of those private operators are?

Robin Gisby: We all have the same cost pressures. There is nothing different from us. We are not perfect—

Q25            Jack Brereton: The cost challenge is different, isn’t it?

Robin Gisby: Why?

Q26            Jack Brereton: Some of the cost challenges that are put on to some of those private operators—

Robin Gisby: We are all in the same boat. We all made the same estimates of how much savings, for example, we could make under workforce reform. We get the same cost budgets, overlays and pressure from the Department as anybody else, and rightly so. There is no easier or softer way of running these TOCs compared with any other TOC.

Q27            Jack Brereton: Minister, I want to ask about single-leg pricing because that has been a trial run on LNER and offers a lot of potential opportunities to reduce ticket prices for passengers on that part of the network. When is that going to be rolled out to other parts of the network?

Huw Merriman: We don’t have a date for that. In fact, we have been focusing on demand-based pricing, which is being dealt with in three phases: first, London to Newcastle; then there will be a second phase that will go towards Scotland; and then we will look at the network overall. We are also focused on how those results will look in terms of trying to get people on to seats where the demand accommodates it, and then we can actually get more revenue. I will write to you with regard to where we will take the single-leg pricing mechanism, which I think has been really successful. There are great examples of how, for a single, you are almost paying the same amount as a return and then being able to effectively halve that off. It is a much better deal for the passenger and ultimately we are trying to grow those numbers.

On the challenges of growth, I completely concur with what Richard and Robin were saying. They are absolutely right that there is no difference; the way that I deal with the train operators in the meetings is exactly the same in terms of the cost pressures. That is equal. Their answer was absolutely spot on.

The challenge we have on LNER—again it is a challenge where we have no rest-day working agreement—is that, in order to step up the timetable, we have real challenges in resourcing. There is probably a bit of bandwidth in LNER at the moment because there was a step up that was expected to take place and did not, so the resourcing was there for something that did not occur. There is still a great reliance on driver/managers, but that only takes you so far. They have been superb in covering, but as we want to increase the timetable, we have the challenges of the staffing. That is where the reform part comes in, with working on a Sunday not as voluntary. We need the reform to step up in order for us to be able to increase passenger services and that is where I am concerned that we will miss out.

Q28            Sara Britcliffe: TPE was the first contract moved to the operator of last resort based on passenger service levels rather than on financial management. Did that make you change your approach in the way that you dealt with it?

Robin Gisby: Yes, it did. We had to get involved. We were asked to get involved by the Secretary of State on 28 May. We changed some of the management. We brought Chris in because the initial problem was about operating a reliable railway. He has got to grips with that. We have a rest-day working agreement. We reset relationships, particularly with ASLEF, quite soon. You can see that, if you run a railway on time, people come back. We are suffering at the moment from periods of action short of a strike, work and all the rest of it. You can see that, when we run a good railway, passengers come back and people are happier. Those are all good things. We had a reset. It is still going on in the first 100 days. First and foremost, it was all about dealing with cancellations and running a reliable railway, because that is what we do.

Richard George: I would say we didn’t do anything different. That is exactly what we would always do. There have been different reasons for TOCs coming to us. Robin is right. The first thing we have to do is stabilise. Whether it be the workforce or the train service, our approach is the same: stabilise things and get people sorted and put in the right direction. Robin is right that in TPE’s case that involved something slightly different. With Northern we needed to step in quite a lot as well. TPE was a more extreme example.

Robin Gisby: Yes, it was. It was under pressure. The management were under huge pressure. A lot of people were spending time analysing and reporting on the problem as opposed to dealing with it, to be honest. You spend a lot of time on, “What’s it going to be next week; what’s going to happen the week after? Let’s write another report; let’s go and talk to somebody,” and all the rest of it. You spend a lot of time managing up here as opposed to down in the railway actually fixing it.

When we were asked to get involved, we used a phrase about air cover a lot. Give the management a bit of breathing space. Chris has been out and about. He has been in the depots on the night shifts talking to people and resetting things. We have listened. On that first Sunday morning, I was travelling out and about and introducing myself. You just get a feeling of things that have drifted and need fixing. If you can do some things quite early on, and the jungle drums beat that around the place, heads lift and things begin to change. It was things around the way that control was organised and who sat next to who, and all that kind of stuff. The staff know how to run these things. We are here to help them.

Q29            Sara Britcliffe: This was done in the space of two weeks rather than your average time of three or four months.

Robin Gisby: The average has come down a lot, yes.

Q30            Sara Britcliffe: What challenges did that present to you?

Robin Gisby: You have a feeling that it is going to happen because you are in discussion with the Department and you are kind of slightly ready, but it is the Secretary of State’s privilege, so we don’t know the final decision until we start.

There is a lot of contractual stuff to do. On the whole, most people co-operate with that: the rolling stock companies, the cleaners and all that kind of stuff. The most important thing to do is to get in front of the management, which is what I did on the Thursday within an hour. It had to be a Teams call because of where we were. Then you get out there and talk to them and settle them down.

It is a bit wobbly. It is quite traumatic. These are staff, from top to bottom, who have been under enormous pressure trying to run a railway and with enormous external pressure in the media and at home with family, friends and all the rest of it. They are not in a great place. You have to get there, support them and put your arms round them. You might make one or two changes. One or two people might not want to come across and work for us. They might want to stay where they are, but you have to be there, help them, support them and give them a bit of air cover. You have to encourage them and push them to have a go at things. At times they look at you like, “Really? Can we? Should we? Maybe,” but they do get it and it does get better.

Richard George: On a practical level, the shorter the timescale, the more complex it is for us to make sure that we have the right management team in place. If you are going to appoint a new managing director, lots of people need to give several months’ notice. You end up running a process after you have got there, which is exactly the process Chris is having to go through at the moment. We are interviewing people for the managing director’s role, which we could not do in advance. The short timescale means that if you are going to change the management, and generally it is quite often the case that we need to, that becomes a complex issue. The contractual thing is quite a good machine for sorting that out now, but the people bit is always the bit that—

Robin Gisby: We have done that three times out of four. David Horne was doing an excellent job and it was just a bidding issue with LNER. With Southeastern we clearly had to change the leadership, given the financial issues that had gone on then. That is what we did with two days to go. Similarly, with Northern, we just had to reset things there. Obviously, we had to do the same there.

Q31            Sara Britcliffe: Why were you given so little notice—two weeks compared to what the average was? Why was that the case?

Robin Gisby: I think that is a question for the Minister.

Huw Merriman: I should probably answer that, if that is okay. This was an expiration of a contract. We wanted to give the operator every single opportunity to be able to turn matters round. Every single week since I was appointed, I sat down and went through data on TransPennine Express and, indeed, on Avanti as well, because those were two operators we wanted to see turned round.

TransPennine Express used to be one of our better operators on performance, some years back. The rest-day working agreement was withdrawn by the unions back in December 2021. It meant that by December 2022 about a third of the services were being cancelled, which was clearly unacceptable. A business plan was put in place for mediation to try to get that turned round. By April the cancellation rate was down to 13%, which was an improvement but still not good enough.

Ultimately I took the view, and so did the Secretary of State, that without a reset we would not get to a place where you would be able to train a sufficient number of drivers. As Chris will tell you, about 50% of the drivers have full route knowledge, so 50% of the drivers are not fully trained up. You cannot train those drivers up unless you have a rest-day working agreement in place that allows you to train. It is a vicious circle. To break that, I felt that we needed to get a reset moment so that we could get a rest-day agreement signed with the unions. That is something that has since occurred.

As Chris rightly said, it was difficult in the early days because it was very unsettling. The cancellation rate, towards the end of May, was back up to 26%. With the rest-day agreement in place, when there is not action short of a strike, the cancellation rate has gone down to 5%. What Chris is looking to do now—he should talk more to this than me, but it just shows I am supportive of what the team are doing—is to use that time with the rest-day agreement to get people trained up, so that we have 100% of drivers and can run a decent service for those who, quite frankly, have suffered for too long without it. That requires some other changes, including in the timetable and the fleet, to give bandwidth and to get everyone trained up.

To answer your question, it was because we wanted to give the operator the maximum amount of time to be able to turn matters round. I was then faced with the conclusion that we would never get there without a rest-day working agreement, which we would not get from the unions without a reset moment. Having now seen that delivered, I believe that it was the right decision to make. I believed it at the time, but I believe that the evidence backs it up now.

The other thing is that, due to my predecessor’s predecessor’s decision making, there is an assumption that the contract will go to a private operator. As you can imagine, the advice that we were receiving was very much that it would effectively remain within private operation. It was a decision we made as Ministers, on business reasons, that we felt the only way we were going to get a turnaround in performance was making the decision we made. It was a difficult one because FirstGroup run some really decent services across the network. I have a great relationship with that team and the highest of regard for them, but on that particular operator I felt that a change was needed.

Chris Jackson: To support what the Minister has just said, the business has several deep-rooted issues, which we have plans to fix. At the core is a significant backlog in driver training. We need rest-day working, as Huw referenced. The change allowed us to reset some of those relationships. I was personally in discussions with the general secretary of ASLEF and the local full-time officer to try to reset things. That facilitated the early switch-on of the rest-day working agreement, which we have had in place since the middle of June.

Since that agreement has been in, our performance has improved on the weeks that we have had rest-day working in place. We have had seven weeks, and cancellations are at 5%, or indeed below. In fact, we have delivered some of our best performance in 18 months, but we are still vulnerable on the weeks where we have action short of a strike, particularly by the ASLEF union, and cancellations spike. We are conscious that we have improved things, but we still remain vulnerable. The critical thing is that we address some of that driver training backlog. We are making good progress. Huw mentioned 50%. In fact, as of yesterday, 63% of drivers now sign all of the routes and traction in their roster, so we are already making some good progress, but there is much more to do.

Q32            Sara Britcliffe: Finally, when will DOHL’s rail services contract be published for TransPennine Express, Minister?

Huw Merriman: Chris is putting in place, and reporting back to us, a 100-day plan: “Right, this is what we have seen, and this is what we are going to do.” We will have conversations very shortly on what the full roll-out is going to be. The other stakeholders—for example, the northern Mayors—have also been involved in this and will have that say. Chris, do you have a publication date in mind?

Chris Jackson: We are circulating that and socialising it with colleagues, and we will be socialising it with the market teams as well. The key point from my perspective is that we are not approaching it with a short-term mindset. The plan is a plan that will see us through to 2030 and beyond. There is lots that we can do to transform this business, and it is key that we are looking with a long-term horizon in mind.

Robin Gisby: The 100 days is up, so we had better have a plan. We have a conversation with Rail North Committee next Tuesday. We obviously have to take the Minister and others through that as a discussion. It will be out there by the end of September. We just need to take it round to a few places. It is a long-term thing. We have to fix December. We will run more trains on time post the December timetable than we are running now. We then have to get through next year, because we want to rebuild this business. Business will come back quickly once we can stabilise performance and customer service.

We then have this enormous thing to cope with, which is the TransPennine route upgrade. In my previous life at Network Rail, I lived through the west coast upgrade, I lived through the great western upgrade and I lived through the Thameslink upgrade. If you look at TransPennine and what has to be done there, it is an enormous undertaking. We have to get that railway match fit now, in the next 18 months, to be ready to get into the really serious work that is coming in the next couple of years and beyond. We will address that in the plan as well when we give it to you in a couple of weeks’ time.

Huw Merriman: Chair, can I just say something to Ms Britcliffe? I think you are looking to really get underneath the details of how this operation works and where the Department for Transport involvement is. I read something recently that caused me to respond with an explainer on Twitter, which normally I would never do. It was said that the ideas that Chris has come up with, on how to actually reform and change things and get more bandwidth to train more drivers to get adequate numbers in place, were all forced upon him by the Department for Transport. That is not the case. First, they are Chris’s good ideas so the credit should be with him, but they are really supported by the Department for Transport. We do not devise it and tell the operator how to do it. They come up with the ideas. We discuss them and decide if we want to support what is being done. That is a good example of showing the autonomy that the operator has, in the same way that I would expect any other train operator to come up with ideas which we would do our best to support if we agreed with them.

Q33            Jack Brereton: I want to ask a little bit more about what we were talking about a minute ago. Robin, I understand you said that the conditions are the same for LNER as for the TOCs. I have just been looking on LNER’s website and you have this 100 Firsts competition, which is offering £100 prizes. That is great, but how is it possible that LNER can offer that under those similar terms and conditions?

Robin Gisby: The point I made is that the cost base is the same and the contracts are the same. If LNER wishes to develop its revenue like that, it is perfectly free to do so. If other TOCs are not doing that and growing their revenue in the same successful way that LNER is, that is a question you should ask them, not me.

Q34            Jack Brereton: Okay. Let’s move on. The other question I want to ask is around the preparations that you are making to transfer other potential TOCs into DOHL. What preparations are you currently making if you are to transfer other contracts?

Richard George: We don’t need to make overt preparations. Let me explain. The Minister said something earlier about the renewal of a contract. The renewal of contracts is always a flag in the calendar. If the Department is negotiating the renewal of a contract with any of the private sector operators, the only way that contract negotiation can take place with any jeopardy to the operator is if they know there is an alternative to not signing the contract. That alternative is the operator of last resort, so we always have to be knowledgeable about what is coming next in the negotiations, because that is the one most likely to be something that comes in our direction, even if everybody is confident that is not going to happen. It is the only way that negotiation stays honest. There is only negotiation if there is a downside. The downside is that it comes to us.

Q35            Jack Brereton: How many additional staff would you need if you take that on?

Richard George: We don’t.

Robin Gisby: It doesn’t at the moment. We sit with the team in the Department that monitors these things every couple of weeks. In the 16-18 days, there might be 50, 60 or 70 people at short notice working on a mobilisation. None of them is doing that at the moment because there is nothing—

Q36            Jack Brereton: Are you saying that most of the work is not undertaken by yourselves; it is undertaken by officials in the Department?

Robin Gisby: No, it is undertaken by people who work with us on an advisory or consultancy basis in that moment, but we do not have a team of 20 or 30 people back at base sitting there and wondering if something might happen in the next few months. There is us, and then if we get a sense that something might be happening, from discussions from the Minister downwards, through his officials, and you look at the time when other contracts might come up and want to get a comparator as a bit of a stalking horse, we might be used on that basis.

Q37            Jack Brereton: What proportion of that work is being undertaken by the Department?

Richard George: The verbalisation work. Most of that work is undertaken by the Department, or contracted by the Department, but the bill comes to us.

Q38            Jack Brereton: We have seen a massive growth in the number of officials in the Department, haven’t we?

Robin Gisby:  I am not aware of that. That is not a question for me.

Q39            Jack Brereton: It is about a doubling. Perhaps the Minister can answer that.

Huw Merriman: We will write to you with our numbers in rail. We are very happy to do so. What I would say is that they work incredibly hard. If you consider how much things have changed and that we have gone from a franchising perspective, where a private company buys a franchise and it is down to them to grow the numbers and run it, of course under some regulation, compared to now when there is a need to guard the taxpayer and the £32 billion that has been put in over two years, the civil servants are working darned hard and doing a darned good job in my view.

Q40            Jack Brereton: I am not sure that is necessarily a good enough excuse for the level of growth in the number of officials that we have seen.

Huw Merriman: All I can tell you, Mr Brereton, is that the levels of work and output I see from that team suggest to me that they work hard and deliver value for money. As I say, because the regime and structure has changed, then, of course, that means the oversight is there. The first thing this Committee would do would be to criticise us if we were not resourced up to ensure that taxpayer value is protected. That is why there have been certain changes, but I will write to you with that data. I am being defensive on their behalf because they work very hard.

Q41            Gavin Newlands: On the flip side of Mr Brereton’s questions, DOHL has never transferred an operator, thus far, back to the private sector. Why?

Robin Gisby: We haven’t been asked to.

Q42            Gavin Newlands: You have not been asked to by the Department?

Robin Gisby: No.

Q43            Gavin Newlands: LNER has been with you for over five years now. You have said yourself already that it is outperforming the market and is doing very well. I suppose the big question is: should they be transferred back to the private sector? If these operators are working very well in the public sector, would you agree that they offer better value for the taxpayer operating in the public sector than they would if they were transferred back to the private sector?

Robin Gisby: I am not sure about the comparator on that. When it was in the public sector pre-covid, we paid a dividend to Government, which I guess would be similar to a premium payment out of a franchise, but how the two compare I could not say right now. When, whether and how it goes back is not a matter for us. We will run it as well as we can in the time that we have it. Come the time when the market circumstances are right, the industry structure is right and it is the policy to hand it back, we will work hard to make sure that happens.

Q44            Gavin Newlands: Obviously, when it is operating under you no money leaves the country to go to another state-owned railway company that owns the franchise. All the money is reinvested or goes back into the Government coffers. Is that correct?

Robin Gisby: That is correct.

Q45            Gavin Newlands: The rest of it is political and is a matter for Mr Merriman. I am sure we will take it up in the Chamber on a frequent basis.

How are you preparing for moving operators back to the private sector? What challenges do you anticipate when moving them back?

Robin Gisby: We are not preparing for that at the moment because we have not been advised that it is on the horizon. When it happens, we will tool up and get ready for it.

Q46            Gavin Newlands: Do you have an idea of how you would prepare for it, or is it fairly straightforward?

Robin Gisby: To be honest, we have been pretty busy with TransPennine recently. It is not something that we have considered for some time, but we would get due warning of it and we would get ready for it.

Q47            Gavin Newlands: I am not pushing for it to go back to the private sector, as you can imagine from the first question that I asked.

Minister, with regard to DOHL itself and its operations, if the TOCs that are currently under DOHL go back to the private sector, will DOHL’s operations be maintained at the current level, unlike previous operators of last resort under relatively recent previous Governments?

Huw Merriman: In terms of the 12—

Q48            Gavin Newlands: Staff members and operations of the team as it stands at the moment.

Huw Merriman: They will have the numbers that they need to run the holding group. That is absolutely the case. As things stand, to come back to your point—it may also come back to Ms Britcliffe’s point about TransPennine—as well as me saying that there is an inbuilt assumption that the operations will move over to the private sector, equally you cannot just allocate it to one in particular and direct-award it out there. It would need a whole market agreement and process in terms of tendering, which would take too long. That is why the operator of last resort is the right home in that regard. I also believe that they are doing a very good job indeed. I had every confidence that they would take this on and work it well. Indeed, Chris and his team are doing just that.

On how we would move an operator out of the operator of last resort stable and into the private sector, that will be tied in to the development of the passenger service contract, which is a brand new contract model that we will be looking at. That would obviously take some time to be able to deliver. While there is every intention to return to private operators on that particular side, it will take time to do so. Therefore, I am more focused on helping the team to deliver what they are delivering right now. It is interesting that the performance across their stable on every single one of their four operators has gone up, if you look at June and July’s performance. I am very grateful for what they are doing.

Q49            Gavin Newlands: Given the knowledge, expertise and performance thus far, as well as the capacity that is there, what role might DOHL play in deciding on new franchises in competitive bids that come in either for operators or under a deal with DOHL, or for other new franchise bids? Might they have a role, given their expertise?

Huw Merriman: The current model is that they are the operator of last resort. They take on operators that require that particular home and, in the TPE example, that turnaround. In the passenger service contract world, I would not envisage a system whereby the operator of last resort is bidding for a franchise in the same way that I would expect the private market to do.

Q50            Gavin Newlands: A final question from me. Given my initial question on the success hitherto of the operator of last resort with LNER in particular, do you feel that undermines the Government’s “private operator first” approach with regard to the rail network? If the operator of last resort continually proves to be a successful operator, providing best value for the taxpayer, why would we go back to trying to get every operator under private ownership?

Huw Merriman: Because I am not focused or dogmatic about one particular system or the other. I am focused on the performance and the turnaround. We have given you some good figures on the results from the team at the operator of last resort, but if you look at Avanti, for example, which is in the private system, its cancellation rates were at 13% in January in Avanti-induced cancellations. That is down to 1.1%. That is an example of a private operator doing a turnaround, delivering and doing a good job. Equally, they are on time. If you take it within a 15-minute period, which ORR do on one particular model, it has gone from 75%, or just over, to over 90%. They have turned operations around, and that is a private operator doing that.

I am not saying one system good, the other system bad. I actually look on the basis of performance. When they are not performing, I expect them to turn it round. What you have is examples of where things have been turned round. I would put Avanti in that bucket.

Gavin Newlands: To be continued, I feel, Chair.

Q51            Chair: If I may, I will ask Robin one supplementary. I understand that, as you said, you have not been asked to get ready to hand back an operator to the private sector, but if the Minister said, “Yes, we want you to get LNER ready,” what time would you need to do it?

Robin Gisby: I think it would be some months. It is a big deal. You are taking a business with several thousand people and enormous contracts and putting it back out there for many years. In preparing it and in the due diligence of anybody who would want to take it on, both parties would need some months. It is not in the 16-day mobilisation category at all.

Richard George: It is 18 months to sell a franchise under the previous franchising system, so it would not be very different from that.

Chair: That is helpful; thank you.

Q52            Ruth Cadbury: Moving on a stage, what might DOHL’s relationship be, and how will its role change, with the establishment of GBR?

Robin Gisby: We are close to them already. We have moved physically into the same building. We bump into Andrew Haines and Lord Hendy quite often. I think it would continue as it is for the time being. We would just move alongside them and work very closely with them.

We have begun to move some people between the two. We have a Network Rail non-exec director on the DOHL board. We have a couple of Network Rail operating directors on some of the TOC boards. We have formed a very close alliance in the south-east between Network Rail’s Kent route and Southeastern because that is the way we are going. We are joining up track and train, so that is a good precursor for sorting out and developing some of those relationships. I think we would be part of that.

As that structure emerges, the original section 30 legislation for somebody to be there in case an operator gets into difficulty must endure. It may always be needed in some situations, either for the ones we have seen or for some future event that has not been foreseen yet. It is a good working relationship. The closer we work alongside them, the better.

Q53            Ruth Cadbury: Do you have anything to say about what could or should be the relationship?

Robin Gisby: We are talking with them. We talk about structures, relationships and how it should work out. I would like to think that we are one useful and important voice that can contribute to that, as and when the legislation is ready to take it forward.

Richard George: We talk a lot to them about collaboration. We talk a lot about collaborative working in the way in which we look at things. We look at TRU, the train operators working with Network Rail and what we have done in other parts of the country. Robin has talked about the alliance in Southeastern. There are lots of issues about collaboration. Structurally, it depends on what the legislation says.

Q54            Ruth Cadbury: Minister, how is DOHL’s relationship with the Department changing with the emergence of GBR?

Huw Merriman: It has been well described by Robin and Richard. To deepen the Southeastern point, I found that really interesting. Steve White, the MD for Southeastern, and Ellie Burrows, the regional director for Network Rail, have formed quite a unique set-up as to how they work together. We have always talked, and this Committee has heard, “Oh, we’re going to integrate. We’re going to sit next to each other.” They have really changed their model. If you look at GBR, which is very much a regional approach where you integrate track and train and have one person responsible for that, that is the nearest I have seen to that model occurring. I am really delighted by that.

Ellie Burrows is relatively new to post. She is doing an absolutely superb job there, and Steve likewise. I am attracted to the concept of GBR. It is a big change to the train management project, but if there is the ability to evolve it and put it in place already, we should learn from it and replicate it across other parts of the country. That is exactly what I see this being able to do.

Rather than approaching it in that particular way, I look more at, “What are we doing well right now?”, which is very much the GBR model, and, “What can we then replicate?” This is a good example of where one of the operator of last resort train operators is doing just that.

Q55            Ruth Cadbury: Do you have conversations with the Department about your future role with the emergence of GBR? Chris, do you have anything specific to add?

Chris Jackson: I was just going to give a few tangible examples of how we are working closely with the Great British Railways transition team. For example, we are supporting the trailblazer deal for Greater Manchester, which includes things like pay-as-you-go ticketing. That is an example. Of course, we are very heavily embedded as the lead operator for the TransPennine route upgrade, which Robin touched on before. There is significant investment across the north. We need to make sure that we are handling customers correctly through all of those blocks. I feel, as an interim managing director, that the relationships with Network Rail and the relationships and connections with the GBR team are strong.

Richard George: In terms of the future, yes, we talk with the Department; yes, we talk with GBR; and yes, we talk with Network Rail, but, in the end, the future direction of all those structures is in the hands of the Ministers.

Q56            Mike Amesbury: Chris and Robin, I was pleased when the previous operators lost their contracts and, very importantly, so were passengers. It was a poor experience, to say the least. Things have marginally improved; you have given evidence today and the stats actually show that. When can passengers expect an even better service?

Chris Jackson: Thank you for the question, Mike. I think you are right. I am a commuter between Leeds and Manchester, and over the last 18 months I appreciate that it has been quite a turbulent time for customers. We have stabilised things. We know what the deep-rooted issues are in the business, and we have a plan to fix them. As I mentioned before, we have started to turn the corner on performance. We have delivered some of our best performance in 18 months, but there are still weeks when we are vulnerable, particularly on the weeks when we have action short of a strike.

One of the things we got across quite quickly was that we did an operational deep dive into the business, which found that we had a significant backlog in driver training, as I touched on earlier. We need to give ourselves the headroom to deliver that driver training between now and the end of 2024, which is why we are proposing a slight, temporary step back in the timetable off-peak between Leeds and Manchester. That will give us the headroom we need to get through the training backlog, which will then allow us to bounce back strongly in 2024 and beyond.

Of course, things will rightly improve for customers. They are better for customers now on weeks when we have rest-day working in place, but when we introduce the December timetable it will provide much more stability, certainty and predictability for our customers. We will be well on track to stabilising the business.

Robin Gisby: We have to get on top of it and stabilise it. It is showing some good signs, but it is still quite vulnerable. Some of the arrangements were agreed with ASLEF three or four years ago. We need to get back to what the original purpose of that agreement was. Some of it has drifted. Rest-day working is an important step forward, but we are still fragile and vulnerable. There are now five or six other things around that that Chris is on top of to get them sorted out. The relationship with ASLEF, the RMT and everybody is reset and in a better place. Now we have to build on that.

Q57            Mike Amesbury: Why do you think that is? Why is it reset in terms of the trade unions?

Robin Gisby: Chris has approached it in a good way. He has got out and about on the frontline. He has listened more. I have been a bit involved with that as well. Everybody has responded more to some things that had just got a bit stuck, were going down and needed changing on the frontline, such as support for staff, training for staff and driver training. The business is really very complicated for what should be quite a simple train operator. “Get across the Pennines quickly” is what is written on the side of the train. I go back to the question from Mr Howell. It goes to a lot of other places compared with where it was originally meant to go. It goes to quite a lot of small stations. Maybe some of those in the next couple of years will be picked up by Northern.

It rushed through the introduction of some new trains. If you are trying to run four different types of rolling stock across that pattern of services, with some of the working relationships you have as well, it is not easy. If you are changing crew two or three times between Newcastle and Liverpool, and you expect them all to turn up in the right place and one of them doesn’t, it doesn’t work very well. If you have a backlog of driver training so that you have to have this person qualified to drive that traction on that route, you have to deal with that. You have some rolling stock that is quite difficult to maintain—some of the loco-haul stock—and we cannot maintain locomotives in Scarborough overnight because they are horrible noisy things, and people do not like it.

You have walked into something that is quite a complex ball of knitting in its service patterns, its rolling stock and its working practices agreements with the unions. All of that has to be unpicked. December will be a step forward. We are taking some trains out, and that is something Chris will talk through with Rail North Committee next Tuesday. As and when it works, and it will work, what can we then put back in May/June—summertime next year—once we have stabilised things, got in some good performance, and cheered everybody up a bit? Then we can take it forward. When it comes back, I think it will come back really quite well over the next couple of years. Fundamentally, it is a good operator. It is just in a bit of a mess.

Richard George: We need to get into a position where we are not reliant on rest-day working.

Q58            Mike Amesbury: We certainly hope so, and so do the travelling public. Chris, you have previously spoken about business simplification being needed. Would you expand on what you mean by that?

Chris Jackson: Essentially, the business has been allowed to become overly complicated for a relatively small operator. The best illustrative point on that is that we have four different types of trains for a very small operator. One of those types of train in particular—the Nova 3 class 68 mark 5 carriages—is the most training intensive train set in the industry. That has contributed to quite a significant backlog in driver training. That is one of the reasons why we are making adjustments to their deployment in December this year.

There are several other reasons that Robin illustrated. For example, there are some terms and conditions that are relatively restrictive. They do not give us the flexibility that, ideally, we need, or that other operators have. All of those things together have contributed to our complexity. As you would expect, we have a plan to address that and to simplify the business in several areas.

Q59            Mike Amesbury: I will go on to P codes, which were used on an almost industrial scale. It is quite scandalous really. The Office of Rail and Road wants to see an end to the practice. How are you dealing with it?

Robin Gisby: It is awful. I first told the ORR that they ought to get on top of it, because the way it was being used is just unfair. There was a valid reason originally for P codes. If you do not think you are going to have quite enough staff to do something tomorrow, the earlier you can tell passengers what is happening, the better. With Northern, where we had quite an issue with P-coding last summer, we were at least trying to get that message out two or three days in advance so that people could plan. But it had got to—industrial scale is probably quite a good way of describing it—suddenly lots of trains not appearing, particularly for the passengers that TPE is handling. If you’ve got to Newcastle with your suitcases to get a flight out of Manchester airport and the train just disappears, and is not there, that is a really difficult thing. It created a huge problem for Northern because they then had to clear up the problem. They then had to try to get people on different trains and all the rest of it.

We are trying to get on top of it. The level of cancellations has come down a long way. Where you get to the night before and you have a driver issue or sickness, there is a balance between how soon you can tell passengers to give them a reasonable chance and leaving it right to the wire as you try to mix and match to make something work. P-coding, from where it was originally invented 20 years ago to how it has been used and abused in the last few months, has got completely out of order. I completely agree with you. We now need to get that back, and particularly get the overall level of cancellations down.

Cancellations on the day of the race, because something has happened, are coming down to ones and twos. What was being masked until we gave it all greater visibility in the conversations I had with John Larkinson—chief executive of ORR—was the P-coding on top, which was almost like an inverted iceberg. We are on to it. We are not on top of it yet, but that is the absolute thing that we have to prioritise.

Huw Merriman: Perhaps I could add something, Mr Amesbury. When I first took on the role and was looking at the data, I would see the cancellations but it would not show P-coding. “Hang on, where have all these services gone? They just seem to have vanished.” I then insisted that we reported with P-coding and made it absolutely clear that, as far as I was concerned, while it was always good to give passengers notice and to incentivise train operators to do so before 10 o’clock the night before, if it was actually within control, which means not having the crew or crew in the right place, I did not see it as different from any other form of cancellation.

I wrote to the Office of Rail and Road and made it quite clear that that is how I wanted to see some changes. I got a response to say that from now on they will actually report it. That is fine. Watch this space in terms of reporting. Data shows up and behaviours change, but I have also left it with the Office of Rail and Road that I expect it to go further and be precluded, unless you are talking about what tends to be referred to as a force majeure event or matters outside control. Obviously, it is a matter for them but that would be my view.

I concur with what Robin said. There has been a lot of work inside the Department to erase the practice. It is ludicrous. I remember being up in Liverpool and a service had been cancelled because it had been P-coded the day before. It still appeared on the board, but then just came up as cancelled. The reason for the cancellation was due to a short-notice change to the timetable. That does not make any sense to the passenger at all. For all those reasons, I want to encourage it and keep it, so that passengers are given advance notice and can prepare for alternatives the next day, but not to the extent that it was being used.

Q60            Mike Amesbury: Quite frankly, it was a con. It was a con that people could see with their own eyes and feel, and that was based on your experience as well, Minister, of a particular operator at the time.

Huw Merriman: As I say, when I look at my information now, I can tell you that that changes to ensure that I see all cancellations, including P-coding. I also watch what proportion is P-coding and what proportion is on the day. I might put it slightly differently, but I think our sentiments are probably similar.

Q61            Mike Amesbury: Yes. My final question is for you, Minister. You say you are quite pragmatic and not dogmatic in your approach with regard to who runs our services. If it is working at the moment and we see the operator of last resort delivering for the travelling public, why do you have to take a de facto almost ideological approach, “Well, we have to get it back into the private sector at some stage”? You have had to take it out of the private sector because it was failing. Sure, it will be about what works, but in maybe your last 12 or 14 months in post, Minister, you could really make your mark, working together with others, and improve things for passengers by not being dogmatic and being pragmatic. Maybe you could change the title, at some stage, to operator of first resort, being publicly owned and publicly controlled.

Huw Merriman: I agree that we could perhaps come up with a sexier title for the operator of last resort. In terms of the model, what I am really focused on is performance and investment, particularly now. We saw passenger numbers doubling under the private sector. It is absolutely right to say that at the moment, as we have described, the models are not that different. For pretty much every single operator the money is received by the operator, comes back to the Exchequer and then the Department for Transport pays for the cost.

If we change contracts, as I expect by the end of this year, so that more risk and reward is being taken by the private sector, they will be able to invest more in their operations. Quite frankly, as we all know, when the Exchequer is asked, “Will you spend the moneys on trains or schools and hospitals?”, the schools and hospitals tend to be higher in the priority needs when it comes to the taxpayer. It is a harder task to try to get that investment out of Government. Therefore, that is why I believe the private sector are more likely to be investing because they can actually see the financial potential there. That is what we are looking to do to change the contracts. As we do that, you will see a marked difference between the two. That is why I favour the private operator route, but in saying that I am really pleased with the performance of the team. They will continue to deliver.

Q62            Chair: Robin, I am conscious that you need to leave by 11 o’clock. Is there anything that you particularly want to get over to us today that you have not had a chance to yet?

Robin Gisby: I am very grateful. We have had a good run round why we exist. There is probably a slight thing in the room. I know you have a big session about it next week, but I want to talk about ticket offices for a minute. If I have gone and you then start talking about ticket offices, I would rather be here than not.

Q63            Chair: It is one of our later questions.

Robin Gisby: Let me get it out there now so that we can provide anything else you need as a result of the conversation that we are about to have, because you have a big session on it next week, haven’t you?

Chair: Yes.

Robin Gisby: There are a couple of things. First, proposals to reform what happens at stations have come from the industry. The Minister referred to a slightly different conversation. We are not responding here to directions, challenges, policies or whatever that have come from officials or from Ministers. These proposals, in the round—they are still only at the consultation stage—have come from the industry.

If you look at the numbers, it is a great result that people who need some form of help, with some accessibility need to come on the railway, are growing. They are growing more than the overall market. ORR figures for last year were that something like 1.3 million or 1.4 million journeys required some form of accessibility assistance. Sometimes that can be to provide turn up and go by the guard on the train; sometimes, quite reasonably, it is necessary for station staff to do that. First, we are dealing with an increasing number of people who need some accessibility assistance. Overall, it went up something like 60% in the last 12 months. That is a good problem to have to solve.

Secondly, we have a decrease in the number of tickets that are sold behind glass in a ticket office. Ten years ago, it was one in 10 and now it is down to one in two or three where we have ticket offices at the moment. We have some anomalies in that in staffed and unstaffed stations. Northern has some stations with higher levels of footfall that are unstaffed compared with some that are staffed. It is just the way the world has grown up over the last few years. What I would like to do is to move my staff, recognising some of the cost constraints, to where, in general, they can be more use to passengers.

If you go to King’s Cross, TfL—Transport for London—did this very well some years ago. King’s Cross is one of the biggest interchanges between the railway and the underground system, including the arrival of passengers from Eurostar with luggage and other languages. You will not find a ticket office. It kind of works. If you go to Tottenham Hale, where you have an interaction between the railway and the Victoria line, with lots of passengers wanting to get to Stansted and not get on the wrong train, you have staff out and about helping them.

I was in Lisbon a few months ago with family, two grandchildren, a double buggy and a lot of luggage, staring at a ticket machine and trying to get a ticket to the airport. Somebody came up alongside me, helped me to use the ticket machine, directed me to the right train and helped me get on the train with the buggy, suitcases and all the rest of the paraphernalia. My daughter was hobbling a bit because she had just done the marathon, so she needed a bit of help as well. The principle is that we want to move our staff out on to the concourse—they can still sell a ticket and give advice, using a tablet—and out on to the platform, to give the best service and the best help we can to people.

We are not going to rush through something in a hurry, which is why we are consulting about it. We like to think that we run operations well. We focus on safety. We do not want people getting into difficulty on a platform. We focus on performance. We focus on customer service. We are not going to risk any of those hard-won gains by rushing through something in a hurry around stations and ticket offices, so we are consulting. There have been some hiccups about the consulting. The date has been put back and Transport Focus is overwhelmed with hundreds of thousands of things. You will hear all about that next week. What I would like to make clear is that what we are trying to do is to redirect and retrain our staff into a broader role than the very good one they have done so far in past history of being in a ticket office just selling tickets. There are more useful things they can do for us.

I am not going to run away completely, having made that speech, and leave my colleagues to defend it. I thought that I would rather get it out there and say it, and maybe take a couple of comments on it right now before unfortunately I have to depart.

Q64            Chair: I appreciate that. We will come back to some of the detail later. Given that a number of the stations that your different operators cover will be served by a number of them, what level of co-ordination have you had between what Northern is planning, what TPE is planning and what LNER is planning?

Robin Gisby: It has been a bit uneven. I think we should say that. Through the consultation, that is probably one of the things that will flag, where you have two or three operators in the same place. We have a broad mix of stations. We have big things at King’s Cross, Leeds and Edinburgh. We have 460 stations in Northern, some of which are pretty remote, simple things with not a lot going on.

What we have tried to do is address that from maintaining good and better levels of customer service, recognising passenger safety and recognising that some of our own staff get a bit lonely in some of these places. We want to protect them as well. There are one or two places where, if you challenge people to buy a ticket, it can get a bit lively. We need to look after our own staff as well.

We are working through that. What we need across our TOCs is a consistent and co-ordinated approach. What we do at King’s Cross, where we have passengers coming to the railway with a lot of luggage and going long distance, is to have a family room for them with nice warm, cuddly things and so on. That is probably slightly different from what we may do on some of the stations in Northern.

This is not about de-staffing. As I said earlier, we are taking £100 million of taxpayers’ money every 28 days in the four TOCs I am running. If I can see a cost saving, I might take it, but I am not going to de-staff. I am going to retrain and redeploy my staff into wider and better jobs than just selling tickets. I am not going to give away hard-won gains on customer service and passenger safety.

Chair: Thank you very much.

Robin Gisby: I will now leave my colleagues to defend that point of view. Sadly, I have to go. If there is anything coming out of this, please let me know. Because we are owned by the Department, we are able to be very open and transparent in what is going on. While we are operators, we are also able to sit with officials and say, “The way that has gone, it actually looks like this.” We are open and transparent. If there is anything coming out of the conversation in a minute that can also help you prepare for your session next week, get in touch and we will add anything we can. Thank you all for your time.

Chair: Thank you for your time; we appreciate it.

Q65            Jack Brereton: Chris, I want to go back to some of the issues with driver training. When exactly do you expect us to get back to a stage where you are at a more manageable level in everyday driver training?

Chris Jackson: Good question, Jack. To give you a bit of background, when we came in around three months ago the training backlog was around 5,000 days. We have already made some good inroads in that since the switch-on of the rest-day working agreement, which has been really productive for us. It now sits at around 4,000 days, so there is still quite a long way to go, which is one of the reasons why we are having to make small tweaks to the December timetable.

Q66            Jack Brereton: What would be a more normal level?

Chris Jackson: The way that I would describe it is this. It is different for different operators, but I would say that between 500 and 1,000 days would be the normal kind of churn, based on leavers, retirees and new trainees coming through. There is still quite a long way to go, but all of our projections, based on the plans that we have for December 2023, suggest all of that backlog being cleared in 2024.

Richard George: There is a complexity with this. We feel it particularly on Northern. Of course, it takes 18 months-plus to train a driver and three months for them to leave. That causes problems.

Q67            Jack Brereton: In terms of the rest-day working issues that you have mentioned, is the vision that you are going to cease rest-day working altogether, or will there still be some reliance on rest-day working?

Chris Jackson: Rest-day working was always intended to be a short-term measure. If you look at the ASLEF charter, it is quite clear about their perspective on rest-day working. It is important that we have sufficient trained bodies able to operate the timetable without rest-day working. Certainly, when you ask me the question, my long-term goal is to operate a reliable, predictable railway without the need for rest-day working. The reality is that we need it now. We have an agreement that lasts until 31 March next year. We are absolutely going to make the most of it until that point. If you ask me whether I would like it beyond that date, well, yes, I would like it beyond that date because I think that will get us through the driver training more quickly. Of course, that will require an element of negotiation when the time comes.

Richard George: Rest-day working has always existed on the railway. It has always been there.

Q68            Jack Brereton: It is more the scale of it.

Richard George: It is the reliance on running the core timetable that becomes a problem. That is the problem.

Huw Merriman: Perhaps I could add this, if it helps. It concerns me. I have commissioned some work in the Department. To take one of Mr Smith’s Chiltern lines, when there is action short of a strike, one of those lines just does not work—Princes Risborough. Therefore, you have lost fare revenue. Obviously, you have inconvenienced the passengers and lost fare revenue. You have the cost of the bus replacement service. I want to see how this is all actually computed.

While there has been an assumption that rest-day working is better because there is bandwidth, it is good for the workforce because they can work overtime and it is good for the train operators because they do not have to recruit as much, I don’t believe that all of the costs have been taken into account, so I have asked what the benefits are financially in having rest-day working, and what the costs are. There are also other provisions. For example, with certain operators, if somebody is off sick, they cannot be covered unless there is rest-day working. If there is no rest-day working agreement, it means they cannot be covered, so you have lost revenue there. I want to see all of that calculated so that I can discuss with Treasury officials whether there is more of a case for employing more drivers. Then you can run operations at all times. A driver is contracted to work 35 hours in a four-day week and is paid an average of £60,000. If the feeling is that the drivers do not want to do beyond that, it is my responsibility as Rail Minister to ensure that we have resilience and enough drivers so that we can work to that model. At the moment, I do not feel we do.

Q69            Jack Brereton: I appreciate that you are obviously concerned about the scale of dependence on rest-day working, but why was it allowed to develop to that scale in the first place?

Huw Merriman: It has just built up over the years. Avanti was a good example, where it had just become part of the occurrence. I guess it suited everyone when it worked very well and there were no strikes. Drivers got more hours and could work overtime, particularly on the longer distance routes where you can clear your shifts in a shorter period of time.

Q70            Jack Brereton: Do you think there was some complacency?

Huw Merriman: I believe, over the years, there has been complacency. I am afraid to say that it is when things go wrong that you then recognise that that is no way to run it; you do not have the resilience. That work got commissioned when I was actually visiting the Committee in Mr Smith’s constituency. I was up at Aylesbury, and I could see the replacement buses there. I realised that the service had been cancelled due to rest-day working. It had been taken down because it was action short of a strike. Because we cannot see an end to the strikes with ASLEF, in my mind it is even more imperative that we work to a solution that means that, if there is action short of a strike, it does not have the impact because we have enough drivers to allow everyone to drive for a 35-hour week and that is it.

Q71            Jack Brereton: Do you think there were some errors in how First’s contract was originally procured?

Huw Merriman: Over the years, we have seen it across all operations. It is always good to have that bandwidth because, when you are doing training and other matters, it is always good to be able to use it, but you do not want to be using it to be able to run your normal service. I think that is perhaps what got into the system.

Again, I think it demonstrates that it can be done. Chris’s work will demonstrate that, but the idea is to make it time limited because if the unions do not want their workforce to work beyond 35 hours and we cannot rely on that, it makes sense not to have it in place to run the core service. Avanti demonstrated that it could be done because, by employing and training an extra 100 drivers, there is no rest-day working agreement but they have their service largely on track now, albeit there is still a question mark about their ability to cover peak vacation time. The work that I have commissioned internally—the team know how much it matters to me—is all about seeing what the financial gains could be by moving away from that system.

Chris Jackson: In defence of the previous owning group, of course covid had a big impact on expanding the amount of driver training backlog. We had restrictions on the number of people you could have in a cab to learn a route or a type of train, for example. That has grown over the years.

There is one other point I would like to mention about drivers. There is a bit of a myth out there that TransPennine does not have enough drivers. TransPennine does have enough drivers. The issue is the driver training backlog, the type of trains that they can drive and the routes that they can drive over. That is where we have the competency gaps.  Crucially, that is what we are going to plug between now and the end of 2024.

Q72            Jack Brereton: This is not just a pandemic-related issue. I remember these issues on First and TransPennine prior to the pandemic. It is something that has been an issue with this part of the railway for quite some time.

Huw Merriman: As you know, I came to visit you over the summer. I had the opportunity to visit a lot of the railway, speak to a lot of people and be in the cab. Maybe again, it is a question of whether things have changed post pandemic. Certainly, those who train the drivers actually feel that 35 hours makes sense. There is a question about whether everyone is in the right place beyond 35 hours. It is a work-life balance matter for some. They are contracted to work those 35 hours and it is down to them. If they do not want to work beyond that, I respect that, but if we are in an area now where that is the case and they do not want to, or are not allowed to by the unions, we need to find another way. I do not mean any of this to be critical of the drivers. It is more that, if the model has now changed and “35 hours is all I want to do or all I am going to do,” it is beholden on those like Chris and me to build a different model.

Paul Howell: Following on from that comment before I move to the substantive questions, we talk about rest-day working but, at the end of the day, it is overtime. That is what the term is. One of the things I have certainly learnt by listening to this is about your training programme as well. It is not just about training somebody to drive a train. It is training somebody to drive a number of trains over specific routes. The one follow-up I want to draw attention to is in terms of the 18 months to train a driver. Is that 18 months to train them to the full extent of doing everything, or is that to get them on the first train where they are out going solo?

Chris Jackson: Essentially, it is 18 months from the time they walk through the door to the time they are driving a train solo. That is broadly what it means.

Q73            Paul Howell: I am just trying to get that into context. Moving to what I want to talk about, where are you going with the December timetable? We have heard bits of commentary already, but you are reducing services. Can you explain why you need to reduce services?

Chris Jackson: It is a good question, but, as I have explained before and  to reaffirm a few points, we have a significant backlog of driver training, which we need rest-day working to clear. We have a very complicated business that we need to simplify. We have a lot to do to be able to give us a stable and resilient timetable from the back end of 2024. Essentially, we need headroom to do that training and clear it, otherwise we will be in this perpetual cycle of difficulty, and we will not be delivering a reliable and resilient service for customers across the north. We are having to step back to create the headroom to allow us to get through the training that we need.                          

As an example, stepping back on the timetable gives us some train sets that are free and that we can use to train people on the types of traction and the routes that they need to be trained on. That is a crucial part of why we have built the December timetable in the way that we have. To reaffirm, it is a temporary small reduction in the number of services, mainly in the off-peak between Leeds and Manchester. We have protected peak services.

Q74            Paul Howell: I want to explore that a little bit in terms of the whole concept of it being “temporary”. One of my concerns as a north-east MP is about the frustrations that went on when the last timetable changes were being proposed, as I am sure you are aware. There are six or seven sets that go up and down the east coast main line. Part of the proposal at that time was to drop the number of TPEs down to where you are going to now to facilitate more sets going up and down the east coast. One of the concerns for people in my part of the world is that, all of a sudden, this drifts and becomes a permanent situation and that all we end up with is even worse integrity in frequency of trains that are going to get us from the north-east to the north-west.

I would really like you to be as certain as you can—I would welcome your input as well, Minister—about how long this temporary situation is going to be, and some confirmation that it is not going to impact on any changes to the sets on the east coast main line.

Chris Jackson: Currently, we operate 1.5 trains an hour, essentially, from York to Newcastle. In December 2023 that will become one train per hour.

Q75            Paul Howell: The target originally was always talked about as being two, wasn’t it?

Chris Jackson: I guess we need to wait for wider industry decisions on what happens with what is called the east coast main line significant timetable change. That is, as I understand it, still out for consultation. We are awaiting a decision on what that looks like. We will abide by whatever decision is made on the east coast main line timetable.

Richard George: That was going to be my point. This is not just about what TPE can and cannot do. It is about how we use the capacity on the east coast. That is a much wider issue, which is part of a separate consultation. It is a difficult one.

Q76            Paul Howell: I understand that. That is why I expect the Minister to come in on this at some point. The concerns for us in the north are about getting the better services that we need with increased sets up and down. I understand there is work going on between Newcastle and Northallerton at the moment which should improve the six or seven sets. It is up to seven and possibly an eighth. As much as I want the east coast main line to be as frequent as it can be—I use it every time I come down to this place, and I agree with comments made earlier that it is a decent service—I do not want TPE to find themselves, if you like, precluded from using the sets that they need because of non-delivery of the capacity that is required on the east coast main line.

Huw Merriman: Perhaps I could deal with it as a point of principle. Nothing that is being done is intended to then drop service levels down. The idea is to actually get all of those drivers with route knowledge up, so that we can deliver the service that people have expected but failed to receive previously. That is the general principle.

As a separate point, as Chris and Richard rightly touched on, there is a recast discussion going on as to what you do with capacity and whether it is east coast related or TransPennine. I am meeting the chair of Transport for the North to discuss this, because I know that they have queries. I met Andy Burnham yesterday, and I know that he will be involved as the chair of the northern transport body. Ultimately, that will end up being improvements to capacity. We just have to decide where it will actually be. Nothing that is being done in the plan that Chris has outlined is to reduce services and think, “Okay, people are used to that, therefore—”.  It is actually to step the services back up because we have more people trained to deliver them.

Q77            Paul Howell: I absolutely agree with the comments that have been made as we have gone through this about the importance of getting your service and delivery right. The only way you are going to grow services is if people can believe that they are going to be there when you turn up, so that when you walk into the station there is actually going to be a train turning up. All power to you, Chris, in delivering that. As much as I, like every other passenger in the north, would be frustrated by you dropping your service, I can accept in my head that it makes logical sense to take one step back to take two steps forward. What I want to make sure of is that there is not going to be something that is going to block you from taking your two steps forward because of other changes that are there. We all know of the capacity constraints on the east coast in terms of where it is. It is therefore a risk that is going on there.

I will say this, Minister. As you know, the only way to address proper capacity in the north-east is to put the Leamside line—

Huw Merriman: I thought you might say that.

Paul Howell: Whether it is Transport North East or Transport for the North, everybody will tell you that. We need to put some plans together on the proper integrity of the east coast main line.

Huw Merriman: I hear your call. The one thing I would say to reassure you, because we have talked about services and changing train operations, which is right, is that we would not be doing that were it not for the fact that, first, we recognise that the service has been poor for too long, but, secondly, we are stepping up in terms of the infrastructure. The TransPennine route upgrade, which will be to the tune of £11 billion investment, is going on right now. It is incredible what is going on there. It is a sort of electrification all the way across to York, with longer platforms and much more resilience. The Department is putting more money in there than was put into Crossrail.

We are investing not just in turning train operators’ matters around for the passenger but in building the railway for the future in order to step up services. Logically, there is no reason why we would do what you are rightly concerned about. It just does not make sense. We would not be pumping all that money into the infrastructure, as well as working with the train operator, if we were trying to step services downwards.

Q78            Paul Howell: I take your point, Minister. Obviously, without labouring the point, most of the work is the east coast bit of that as opposed to the east coast main line capacity.

Coming back to the subject we are now talking about, I am going to move to where you have just gone—the upgrade that is going on. Can you explain to people what steps you are taking to mitigate the impact of those upgrades? Doing the upgrades is obviously fine, but massive disruption comes while you are doing that. Can you expand a little bit on the work? Chris is probably the best one to start on that. What is actually being done to help customers get through that difficult phase and get themselves to the stage where they have confidence in you for when you come out?                                                               

Richard George: Can I cheer you up? I think the TransPennine route upgrade is probably the best example I can think of where Network Rail and the train operators are talking at great length about all the mitigations that need to go on. They are actually working as an enterprise in one way to try to do it. A lot of resource that Chris has in TPE is devoted exclusively into sorting out those issues. It is actually a very good example of collaboration with the other parts of the industry.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

It is the nature of major upgrades that things happen, things go wrong, and things do not come back on time. That is the nature of them, which is why the communication on it has to be absolutely excellent because things will go wrong, but the detail of it is very much with Chris and his people in their conversations with Network Rail and how it is done. Then you get to the detail, Chris.

Q79            Paul Howell: Before you start, Chris, I absolutely agree with you, Richard, about communication. Communication, communication. If you can tell people that this is what is going to happen in December, January, February and March, they will put plans together. If you are telling them, almost like in a P code world, what is happening tomorrow, then you are dead.

Chris Jackson: You are absolutely right. To provide some illustrative points, we sit on the TransPennine route upgrade board, as TransPennine and Northern do as well. We are fully integrated. We talk about engineering access strategy. The key thing for us is that, where we can keep people’s bums on train seats to get across the Pennines, we will absolutely do that. In fact, that is one of the reasons why the driver training backlog in TransPennine is so big. A lot of it relates to diversionary routes that we need drivers to be competent on to get them across the Pennines from Leeds to Manchester. That is why we are making some really good progress in that regard.

We will be operating two trains an hour over diversionary routes for many of the weekends when we have disruptive engineering work. There is going to be quite a lot of disruptive engineering work, particularly next year, that we are preparing for in the background. There is a strong team of comms and marketing professionals who are fully engaged in making sure that customers are absolutely clear on what choices they have to make. We will only use buses and rail replacement transport as a last resort.

Q80            Paul Howell: Do you have a date in your mind as to when you will therefore be coming back and saying, “Right, we are now ready to go back to three trains an hour”?

Chris Jackson: I was talking there about the TransPennine diversionary route capacity. I think it links back to what I was saying before about the step back in the timetable in December.

Q81            Paul Howell: I assumed the two were linked. Sorry.

Chris Jackson: I will give the Committee comfort now. Our intention is to fully restore the timetable. Granted, we need to see what happens with the east coast main line decision, but we will restore that timetable in December 2024. As Robin mentioned earlier, if we make good progress with driver training over the course of 2024, and we can reintroduce services earlier, we absolutely will. I am going to be communicating that to Rail North Committee when I see them and the northern politicians next Wednesday.

Richard George: But not everything is under Chris’s control. If, during that period, there is a lot of disruption from action short of a strike, or strikes, that disrupts everything in that programme.

Q82            Paul Howell: I accept that. Obviously, I encourage you to communicate that as well and as clearly as you can, and then shorten it as much as you can. I think it is a given that that is where you would be.

I moved into that as a discussion just because of where the Minister took me in conversation. I want to go back to the service changes. You have talked about the training needs and all of that. One of the other things that you have talked about is the removal of some of the rolling stock. You have taken an element out. Listening to what you are saying, that seems to be a simplistic thing: “Instead of having the train on this number of sets, we are going to take one set out so that we do not have to do as much training in as much complexity.” That is some of your newest kit. There are almost two sets of questions. How did you end up with the wrong kit coming in in the first place? I know that is before your time, but you might want to give an opinion on that. Secondly, surely there must be some cost impacts in terms of contracts you must have for that kit. How does that play out with the UK Treasury?

Chris Jackson: It is a good question. There are no easy decisions here. The particular type of train that we are talking about has added to the complexity of the business. There are other complexities in how we can allocate those trains. They are underutilised as it stands at the moment because of various operational and overnight stabling constraints. We have 13 of them, but we can only ever reliably operate six on a daily basis. Given backlogs in competency, we can only operate maybe two or three in traffic on a daily basis. We have made the difficult decision to temporarily remove them in December, but we are in active discussion with the Department and others about their long-term future. They will not be in the plan from December. Crucially, just to give you some comfort, the work that we have done shows that with the capacity that we have, it will more than satisfy the demand, certainly over the next five-year window, for the people who want to travel.

Q83            Paul Howell: I’m sorry, Chris, that seems a bizarre statement to me. You have this number of new trains, but you can only use half of them and then only a fraction of them are actually in use. How did you get to that stage? It is one of those questions where you should not have started from here. How did that occur?

Chris Jackson: Could I jump in, and maybe Richard can follow? They were the right train that was ordered at the right time. It was the rolling stock that was available, and they plugged a gap. I think no one could have reasonably foreseen the issues that that fleet has experienced since their introduction. They were very late into the market and, of course, they have generated a very significant training burden. They have contributed to the complexity of the business, which on top of covid and everything else has added to the problems that we face as a business. There are no easy decisions here. In my professional opinion, the plan for December, which involves that rolling stock being stepped back, is the only way that we can fix some of the deep-rooted issues that TransPennine faces.

Q84            Paul Howell: I can follow your position from now. I am still flummoxed by how you got to that stage in the first place. Surely, the organisation would have known the complexity of training needs. Surely, they would have known the way that the trains were going to operate. Yes, there might be an issue on late delivery, but the rest seem to be things that TPE should have known about on the way in.

Richard George: Looking back historically, this would not be the first set of rolling stock where people underestimated the complexity of its introduction or the complexity of the operation that would result. I was not part of the bidding process at all at the time, but I suspect that the people who were putting that franchise bid together suggested bringing that rolling stock in. It would have been with everybody’s agreement as a good idea because we wanted additional capacity, additional services and new trains. Great idea. It would have a good following wind behind it because it was what people wanted to see.

The problem is that you can get quite carried away with the idea of “This is what we want,” and not fully appreciate all the complexities of the operation that you are about to import into that operation. I can think of similar mistakes that have been made on the infrastructure side, where people have created a bit of infrastructure not fully appreciating the complexity that it has generated elsewhere in the system.

On one level, it is inexcusable. On another level, it is completely understandable. These things happen as part of the process of trying to improve what we are doing. Sometimes people do not always fully appreciate the knock-on effect. There is a huge knock-on effect. Everything on the railway is interconnected, and it is very difficult to isolate those interconnections.

Q85            Paul Howell: We could talk about this one for quite some time, but I have one final question, Minister. It all seems very rosy in terms of “We’ve got good people doing good things that are going to get us into a much better place than we are.” If that doesn’t work, do you have a plan B?

Huw Merriman: Plan A is incredibly challenging. There are a lot of different variables. While we have a reset moment with the union in terms of the rest-day working agreement, with which we are very pleased indeed, there are a lot of other practices that are going to need to change in order for us to be able to roster a seven-day railway. There is a huge number of challenges, but I have every confidence in Chris and the team. I think the ideas that are being put forward are the right ideas.

I also agree—we have seen it with Avanti—that, if we make difficult decisions and actually stay up front, we are going to have to reduce the timetable, but at least we can give you that certainty. We reduce it in order to use the time to train the workforce and get the skills up so that we can then increase the timetable. It has worked before, and it gives transparency. I have every confidence in Chris and the team.

We said at the time that just transferring the train operator to a different entity was not itself going to deliver this because there are matters that are outside Chris’s control and are more in the control of the unions. If we see a step up on action short of a strike, for example, which basically means you cannot use the rest-day working agreement, Chris cannot deliver for the time periods he is seeking to do. We need to continue to see the unions move forward in the right direction as well as Chris’s team.

Paul Howell: I endorse that. I think anything we do to evaluate what Chris and the team are doing has to be cognisant of the environment he is working in. I get that.

Q86            Chair: Before I hand to Gavin for the last set of questions, I have a supplementary on that rolling stock point. You said you are temporarily withdrawing them. Does that mean you have a wish to reintroduce them at a later point? What else can happen with that stock? There are many other parts of the railway with very crowded trains. I am sure they would welcome some new rolling stock.

Chris Jackson: We are in active discussions with the Department for Transport about their future use. I would not want to determine what the outcome of that would be. As it stands at the moment, we don’t have any plans to reintroduce them into traffic as TransPennine trains. We are still in active discussions on what will happen with them in future.

Q87            Chair: When are we likely to hear what is going to happen?

Chris Jackson: Those discussions are ongoing now.

Richard George: In the old days we used to call it the “rolling stock cascade”. The Department has to think about the cascade in a broader sense across all of the country. I don’t know what the outcome of that will be, but it is part of a wider cascade discussion than just TransPennine.

Q88            Chair: Might we see it in a couple of months?

Huw Merriman: Perhaps I could cover this, Chair, because it has come to me and I have asked a series of questions internally of my team about the consequences of putting the rolling stock back, the financials and how it can then be reintroduced. There is currently a body of work being put together for me so that I can actually help make those decisions. It is live. I responded to the paper about two days ago. We will keep you posted, for sure.

Q89            Gavin Newlands: Chris, we heard a fairly impassioned description as to  why the ticket office closures are likely to happen. Do you have anything to add from a TransPennine perspective? Ultimately, TPE are planning to close all of its ticket offices. The two remaining open are Manchester airport and another which escapes me just now. Why all of them?

Chris Jackson: It is important to say that it is out for consultation at the moment. We are waiting to get the feedback. Do I expect the plans to change? Maybe they will. It is a meaningful consultation, and that is something that I have certainly committed to my frontline colleagues. We will ensure that it is a meaningful consultation. It may be that the plans we put forward adjust once we have listened to the feedback.

Q90            Gavin Newlands: Perhaps the Minister will speak with regard to the consultation. You will be aware that there was a similar consultation in Scotland which reversed ticket office closures. There were only three proposed, but it reversed those ticket office closures.

I am looking at your proposed staffing levels versus your current staffing levels. What is the estimated saving when it comes to staffing costs of TPE, if the current proposal was to come to fruition?

Chris Jackson: The proposals are out for consultation. We need to listen to the feedback. If we need to make adjustments to the proposals, we will do so on that basis. In our proposals, no station that is currently staffed will become unstaffed. You asked about quantification. I do not have that figure in front of me. It would require some analysis, but I am more than happy to come back to you afterwards, should you want that information.

Q91            Gavin Newlands: Good. That would be useful. I could sit here and give a number of stations where the ticket office is currently staffed until 8 o’clock, but they will only be staffed until 2 or 3 o’clock during the week, which is quite a stark difference. We are told that this consultation is not about saving money, but you can clearly see that there are potentially fairly vast savings for some operators compared to current spend. It would be useful if you could furnish the Committee with that information. When the ticket offices are closed following the consultation, if it goes ahead, do you expect to sell fewer tickets as a result?

Chris Jackson: No, because I think there are many other means by which people can fulfil their need to get a ticket, be it by mobile app or the extensive number of ticket vending machines that we are installing or have installed across the network. Of course, there are opportunities, if people do not have the ability to pay, to get certain ticket types on board as well. I think that the options are still going to be there for people to purchase tickets. As Robin mentioned, there will be no detriment from a customer service perspective. People will be there who can support the purchase of tickets for those who have needs.

Q92            Gavin Newlands: It is fair to say that the coverage of this proposal has not been particularly positive. That is not just TPE but in general terms. How have your customers reacted to your proposals? What feedback have you had thus far from your customers directly?

Chris Jackson: I remain quite close to frontline colleagues, and I know that they have had some very strong opinions expressed to them on the frontline. I am not immune to that. We referenced before the hundreds of thousands of responses that have gone to Transport Focus. We recognise that it is sensitive. It is raw. Of course, I am close to the northern political leaders, and it is very much a hot topic with them as well. We will listen to the feedback. We will take it on board, and we will ensure that the consultation is meaningful. That feedback is being collated as we speak. I expect to be able to see it in the coming days.

Q93            Gavin Newlands: Further to my initial question, which was about operational cost savings, if cutting ticket offices and cutting staffing hours saves money, will that potentially be reflected in any fares to the public? I will come to you, Richard, for your perspective on that.

Richard George: In the end, all regulated fares are agreed and set with the Department. We are not in a position to make savings locally to local tickets. They are nationally regulated fares.

Q94            Gavin Newlands: No wiggle room whatsoever to offer special tickets? It is all completely regulated by the DFT.

Richard George: They are not all completely regulated, but, in the end, currently revenues are something that we are budgeted on and that we agree with the Department. We are budgeted on costs, and we agree that with the Department. How we set the fares is a more complex marketing argument than, “You’ve saved some money at the ticket office.”

Q95            Gavin Newlands: I appreciate that. Do you have anything to add to that, Chris?

Chris Jackson: Just that customer numbers in terms of journeys are 10 million lower per annum now than they were pre-covid, so we have a revenue shortfall, but we recognise that we have not been performing as well as we would have liked over the last 18 months. That is one of the reasons why we are developing a customer redress proposal in the form of a win-back sale. I will be sharing the details of that with Rail North Committee next week. We are doing things to try to re-incentivise travel.

Richard George: We can do local incentivisation in that sense, but fundamentally—back to the point I was making earlier—if you get the service right you get a virtuous circle, and that is what works.

Q96            Gavin Newlands: As we have discussed in the Chamber a few times, rail tickets in this country are rather overcomplicated in terms of the number of tickets you can potentially buy. Am I right in saying that not every ticket is currently available from a ticket machine? Is that fair to say?

Richard George: The last time I used a ticket machine on Northern, I tried to test that out. It was a ticket machine that allowed me to talk to somebody. There was a little screen, and I was able to talk to somebody and have that conversation to get whatever ticket I wanted. A lot of the ticket machines are a lot more sophisticated than I think people anticipate.

Huw Merriman: Can I look at this from a national perspective? In the last year, 99% of the transactions that took place at a ticket office could have been purchased online or through a ticket machine. You are right to say there is that 1% differential. That is why, as part of this programme, I have asked for an upgrade of machines so that more can be made available. Equally, there are certain transactions where one has to go to a ticket office. Why is that? I think I have talked to the Committee before about weekly travel cards. Southeastern is a good example, where they are getting S-ticketing, for season tickets, so that it can actually be read from a code on the phone. That is trying to bring more products on board as well.

There are other concepts to ensure that passengers know that they can purchase on a train. If you go to Hellifield, which is a northern station on the Lancashire border, the ticket office is a café. There is no ticket office. There is no member of staff. There is no machine. The sign tells you to get on board and buy your ticket once you are actually on the train; 43% of our stations do not have the capability for ticket officing, but you can still board your train and not get into difficulty in fare purchasing. The model exists at the moment. That is the concept that is trying to be built on by this consultation.

Q97            Gavin Newlands: I fully accept that we are talking about 1% in this case. It may be more for certain operators than others, but the national average is 1%. Would you consider pausing any closures until the upgrades on ticket machines are carried out, if that is indeed possible? Some of them may be obsolete and will have to be replaced.

Huw Merriman: I am looking at all the ideas from the consultation. I want to make sure of the words I used in this place, when I talked about it being a redeployment and a better use of staff time. As has been said, it was the case 10 years ago that one in three tickets was purchased from a ticket office. It is now one in 10 transactions. That, by its very definition, means that there is less to do for the person working in the ticket office. As has been mentioned, there is more demand for staff. For example, the latest ORR figures show that Passenger Assist at the station is up by over 60%. We know that people need their staff, but the question is whether those staff are in the right place.

What I can say is that, after I have talked about redeployment, there have been examples where, while no station becomes unstaffed, there is a dramatic reduction in the hours of coverage. I can tell you that was not what I envisaged when I was speaking in Parliament. That is why there is consultation in the process. What happens next is that the almost 700,000 responses will be dealt with by the passenger groups. They will then look at those in conjunction with the train operators and come up with a solution. If a solution cannot be found, it finds its way to the Secretary of State. Because it is a legal process as a consultation, we are not a party to it. It is the train operators. You can imagine that the lawyers would not necessarily want more to be said, but I understand the point you make about the strength of feeling. Perhaps I can reassure you that I am looking at proposals and ideas so that we can make sure that the redeployment part, and passengers getting a better deal from a member of staff, and that member of staff being there at the times they currently expect, remains at the forefront of these proposals.

Q98            Gavin Newlands: Minister, I am sure this will all be discussed at length next week, so maybe I will hold my fire on some of that.

I have a final question for Chris and Richard. Given what has just been said about machines and paying on board, how can a customer pay with cash for a ticket when a ticket machine does not accept cash? Crucially, how can a disabled passenger turn up and go using your trains when there are no staff there after 2 o’clock?

Chris Jackson: I will take the accessibility point. It is crucially important for us. We need to have an accessible railway. Every train on the TransPennine network has both a driver and a conductor. Some of the trains have a driver, a conductor and a revenue officer to support as well. There is always someone there to support a customer on and off who might have accessibility needs. That is not going to change in the future.

We are installing cash-capable ticket vending machines. Equally, if people have no alternative means of paying other than cash, there are means to fulfil those tickets on board with our conductors.

Q99            Gavin Newlands: Finally, while I have the Minister and as we have the session next week, in a recent exchange you promised to write to me about the ticket offices at Glasgow Central and Edinburgh. Would it be possible for you to make sure we have that response before the session next week?

Huw Merriman: Yes. I wasn’t happy with the draft. It did not conform to my usual standards of answering the question in the manner that I wanted it to. I am redrafting it, so you will have that. You asked me what was the rationale for the ticket offices that would remain. There will still be something that may not make as much sense, but I will say it to you right now. Because it is a train operator by train operator consultation, one train operator, for example Avanti, may look at Manchester Piccadilly in a certain light and the other train operators at Victoria or Oxford Road, would look at it in a different light. I will make sure that you have an answer, but it will actually still have that nuance to it. Yes, it will be by next week.

Gavin Newlands: I am grateful. Thank you, Chair.

Chair: That brings us to the end of today’s session. We have teed up next week’s session. I thank you all very much indeed for your time and evidence this morning.